Society of Indian Automobile Manufacturers has welcomed the Union Budget 2013-14 tabled by Mr. P. Chidambaram, Finance Minister. Mr. S. Sandilya, President, SIAM shared his views about the budget and said that, under the current economic environment, the Finance Minister has tried to balance the need for growth with fiscal compulsions. The announcement of investment allowance reintroduction is very positive. Focus on infrastructure is also a welcome move which will help growth of the economy.
While there are several innovative proposals, the auto industry had expected that the Finance Minister would come out with more specific roadmap for implementation of Goods & Services Tax (GST). The industry would be keenly looking forward to full implementation of GST at the earliest.
SIAM appreciates the Finance Minister’s gesture of allocating double the funds under JNNURM scheme enabling substantial part for purchase of up to 10 thousand buses. This was very much needed for revival of CV sector. Finance Minister has also accepted SIAM recommendation to lower excise duty on commercial vehicle chassis from 14% to 13% which was raised in the last budget and led to significant drop in off-take of chassis by the body builders.
With a view to deteriorating market sentiments, SIAM had also recommended reduction of excise duty for passenger cars by 2% which could have led to significant improvement in sales. However, the Finance Minister has accepted SIAM’s recommendation on extension of concession for import of electric and hybrid electric vehicle parts till 31st March 2015.
The increase in customs duty for luxury cars and motorbikes seems to be an effort to raise more revenue and to encourage local manufacturing, value addition and employment. The proposal to increase duty on second hand vehicle from 100% to 125% is the right step. It clearly conveys that India is not ready to accept second hand old vehicles from other countries.
The other area which the industry did not expect was the increase in excise duty on SUVs used as personal vehicles. This is the only segment in the industry which has been doing well this year and increasing price of these vehicles would dampen sales and impact market sentiments further. Mr. S Sandilya thanked the Finance Minister for accepting various suggestion of SIAM and hoped that the budget will help take us back to growth path and improve performance of the industry. The critical thing, however, will be speedy implementation of the policies.